The Dane Investments anomaly.

by Chris on February 17, 2012

In 2008 the Louisiana Fourth Circuit came to an unsettling decision in the Dane Investments case. In Dane the court extended the doctrine of “absolute nullity” in such a manner that dangerously jeopardized land titles in Louisiana. The trial court proceedings were rather simple. The plaintiff tax-buyer waited until the three year redemption period ended then filed a suit to quiet tax title. After several service attempts the defendant was eventually served but never responded to the lawsuit. A default judgment was entered and all the appeal periods prescribed when the plaintiff executed the judgment.

It was at that time the defendant decided to litigate the issue. Although no appeal could be taken, and although a valid final tax sale confirmation judgment was rendered, the defendant filed a completely separate lawsuit titled “petition to annul tax sale.” Procedurally, the defendant’s case should have been dismissed since it raised issues that should have been asserted in a reconventional demand. By failure to respond to the original lawsuit the tax debtor’s claims became res judicata and the only relief sought by the debtor should have been by filing a suit to annul the judgment.

The Louisiana Supreme Court has routinely held  “that matters once determined by a court of competent jurisdiction, if the judgment has become final, can never again be called into question by the parties or their privies, though the judgment may have been erroneous and liable to certain reversal on appeal.” See also, Heroman v. Louisiana Institute, 34 La.Ann. 805Buillard v. Davis, 185 La. 255, 169 So. 78Metropolitan Bank v. Times-Democrat Publishing Co., 121 La. 547, 46 So. 622Pitts v. Neugent, 187 La. 694, 175 So. 460Lowe v. Rivers, 445 So.2d 105 (La.App. 2 Cir.,1984); Guidry v. Bayly, Martin & Fay of Louisiana, Inc.  545 So.2d 567, 570 (La.App. 4 Cir.,1989); Richards v. Crescent Towing & Salvage Co., 115 So.2d 894 (La.App.Orleans 1959);Valien v. Prather,  348 So.2d 229, 232 (La.App. 1977); Clark v. Stone, 447 So.2d 1202 (1984).

Despite this, the district court permitted the tax debtor to annul the tax sale and “vacate” the judgment of confirmation. The Fourth Circuit upheld the decision which plainly disregards the positive law of res judicata without explanation. The Dane Investments decision has not been well received by the judicial commentators who observe that, contrary to public policy, it renders the tax sale confirmation procedure meaningless.

However, under civil law the legislature is the author of the law that must be interpreted and applied by the courts. In this vein, the “absolute nullity” interpretation contended by Dane Investments has been rejected by the legislature in the enactment of Louisiana Revised Statute 47: 2286 which holds that all bases for setting aside a tax sale are relative nullities. Courts should recognize the obvious legislative purpose to stabilize tax titles and reject the Dane Investments decision, and give immediate effect to the 2009 revisions of the law.

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